Effect this measure will have on costs and revenues of state government.

The stated purpose of this resolution is to increase the homestead exemption from $20,000 to $40,000. The bill also provides that the Legislature may adjust the exemption every ten years to reflect any increased rate of inflation.

The increase in the Homestead Exemption from $20,000 to $40,000 would result in a revenue loss of $27.4 million annually for local levying bodies and an increase of $1.8 million in General Revenue Fund collections.

There would be a one-time programming cost of $40,000 to the State Tax Department for computer programming changes on the statewide property tax computer network. Other additional administrative costs to the State Tax Department cannot be determined. There would be no additional administrative costs to local governments.

Fiscal Note Detail

Over-all effect

Effect of Proposal

Fiscal Year

2009Increase/Decrease(use"-")

2010Increase/Decrease(use"-")

Fiscal Year(Upon FullImplementation)

1. Estmated Total Cost

0

0

0

Personal Services

0

0

0

Current Expenses

0

0

0

Repairs and Alterations

0

0

0

Assets

0

0

0

Other

0

0

0

2. Estimated Total Revenues

0

0

-25,600,000

3. Explanation of above estimates (including long-range effect):

The increase in the Homestead Exemption would result in a loss of $27.4 million in local property tax revenue. General Revenue Fund collections would increase by $1.8 million as the $110,000 decline in State property tax revenue would be offset by a gain in Personal Income Tax collections. As the level of the Homestead Exemption rises, the number of taxpayers who owe property taxes on their home declines. Therefore, the cost of the refundable property tax credit against Personal Income Tax liability for lower income households would also decline.

There would be a one-time programming cost of $40,000 to the State Tax Department for computer programming changes on the statewide property tax computer network. Other additional administrative costs to the State Tax Department cannot be determined. There would be no additional administrative costs to local governments.